Why do property owners care about critical habitat?

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Recently, 18 states announced that they were challenging the Fish and Wildlife Service’s new critical habitat regulations. For decades, the government has treated the Endangered Species Act’s critical habitat provisions as largely redundant of the broad “take” prohibition and thus not all that consequential. In fact, until recently, the Service declined to designate critical habitat for most species. Although the Service is now more aggressive in designating critical habitat, it continues to insist that its impacts on property owners are negligible.

So why do property owners, including these 18 states, care if their land is designated as critical habitat, if they’re already subject to the take prohibition? Coincidentally, I’ve been reading my friend Timothy Sandefur’s insightful new book, The Permission Society. It perfectly captures why people strongly object to the designation of their private property as critical habitat, despite bureaucrats’ assertions that it doesn’t really matter.

In his book, Tim explores the crucial distinction between rights and privileges. In particular, he describes the all-important differences between a society that presumes people are free (the free society) and one that presumes they can only do what government permits them to (the permission society).

As he explains it:

There are essentially two ways for the government to regulate the things people do: the nuisance system or the permit system. These two approaches are based on the two different conceptions of freedom: right versus permission. The nuisance model rests on the premise that people have a right to act freely unless they harm someone else, while the permit system — as the word implies — assumes that people may not act unless the government allows them. [The Permission Society, p. 28]

This distinction will be apparent to anyone familiar with the First Amendment prohibition against “prior restraint.” Generally, we’re free to speak our minds, subject to after-the-fact liability for the consequences of our speech. A prior restraint, however, would forbid you from speaking until the government approves what you have to say because you might say something that could have negative consequences. Obviously, which of these regimes prevails has huge implications for the risk of censorship (and, thankfully, the First Amendment guarantees us the former).

Under the take prohibition, people remain free* to do as they wish, subject to after-the-fact punishment if they violate the law. Thus, procedurally, it’s consistent with the free society. When your property is designated as critical habitat, however, you lose that freedom and, to use your property, must first prove to the government that you won’t adversely modify the habitat or, if you will, meet whatever demands it imposes on you as a condition for its permission. This is a quintessential example of the way the permission society works.

Government claims that critical habitat is largely redundant because activities that adversely impact critical habitat would likely also violate the take prohibition. As I’ve explained, the take prohibition is so broad—it forbids essentially any activity that affects a single member of a species or its habitat—that it prohibits ordinary land uses. Although the completeness of the overlap is questionable, the bigger reason why the government fails to appreciate property owners’ concerns is that it doesn’t see the fundamental difference that Tim has described.

Tim’s book identifies a bevy of problems with permission societies that are endemic to the implementation of the Endangered Species Act. For instance, permission societies must overcome Hayek’s “knowledge problem”—the bureaucrats making decisions can’t possibly understand or have access to all the knowledge required to understand complex systems. Any property owner whose ever read a Fish and Wildlife Service economic analysis proclaiming that critical habitat will have only negligible costs will appreciate the impact of that problem here.

The presumption that you begin with greatly affects outcomes. Bureaucrats will make errors in both directions. Sometimes they’ll permit things they shouldn’t. Other times they’ll block things that should have gone forward. Because the first type of error is far more visible—e.g. an oil spill broadcast on the news v. a life saving technology that never developed and no one ever heard of—bureaucrats will do everything they can to minimize the first type of error and have little incentive to care about the second. As a result, environmental permitting’s most significant impact is to thwart a wide range of projects, even environmentally beneficial ones, by making it so expensive and risky to seek a permit that the projects never get off the ground. Critical habitat makes it so expensive for property owners to build homes, businesses, or anything else on their property that they will likely just give up, losing out on unknown opportunities.

Although The Permission Society didn’t intend to, it has provided a much-needed and clear articulation of why property owners continue to fear critical habitat designations, despite government insistence that it doesn’t matter. So what are you waiting for? Buy Tim’s book! : )

*For these purposes, I’m setting aside the question whether the take prohibition is a valid restriction on liberty or an impermissible and unfair restriction on private property. The point, for purposes of this post, is that there’s a huge difference between a regime that says do what you want, but you’re responsible if X happens, and one that says you can’t do anything without the government’s prior permission because X might happen.